Quote Critique

"With globalization, the big [countries] don't eat the small, the fast eat the slow."
- Thomas L. Friedman (NY Times foreign affairs columnist, referring to the Arab nations)

A cryptic quote without context, I can only assume Mr. Friedman was hungry when he wrote this commentary. Using words like fast, slow, big and small, confuses me because I have no idea what sort of metrics he reviewed to formulate this opinion. IMHO, countries that produce and utilize cheap, efficient weaponry, outlast the competition in the game of global survivor.

Bong Break

A tip of the hat to Adam Warner at the Daily Options Report for re-posting this awesome clip. I'm glad the fellows at Clusterstock keep tabs on the important stuff.

CNBC: The Whole Country Needs A Bong Break from AlleyInsider on Vimeo.

Clearly Smoking Securities is ahead of the curve.

Ratios to Reason $SPX

A weekly look at 5 indicators that depict the current market environment.

$BPSPX:$VIX = 97.31

$BXM:$SPX = 70.22

$CPMKTE:$CPMKTB = 39.67

$SPXA50R:$VIX = 87.58

$SPXHILO:$VIX = 15

The only glimmer of bullish hope my indicators offer is a 50% increase in the $SPXHILO:$VIX since my last analysis here. Otherwise, the bear market remains intact, and until the VIX can make a sustained move down, I suspect we will see increased market weakness. I'm eager to see how Barclays new volatility ETN's will trade, especially in light of the markets lack of confidence in their risk management, reflected by the $3 stock price. New products offer new strategies, and though their entry seems late to the party, the potential for increased diversification is wonderful.

Portfolio Theory $DBC $EEM $IWN $IYR $PLW

A look at the 5 least correlated liquid ETFs.

Commodities have stabilized over the last two months, but DBC technically remains in a downtrend. Long positions are remain speculative, but my gut tells me that there is more risk being short than long.

The bounce I was looking for in emerging markets never materialized, and EEM remains in a downtrend. The potential for a massive head and shoulders pattern remains, but caution is warranted for those looking to invest abroad.

Small cap value stocks remain in a downtrend, but there isn't much volume to confirm the recent price action. IWN continues to flirt with the lower Bollinger, so there is little reason to look for upside, even though a new X has been printed.

Real estate remains the weakest sector, and volume appears to increase during sell offs, confirming my bearish outlook. IYR is not showing signs of recovery, and that does not bode well for the rest of the market.

Despite market weakness, Treasuries weakened this past week. This is a bullish sign, and I love the prospects of TBT. Nevertheless, a strong bounce off the trend line is likely, so another run to risk free yield may be in the works this week.

Day trading remains the name of the game, but in the next few weeks, I hope to reveal a longer term strategy that takes advantage of the incredible volatility. TBT remains my favorite long, but I'm still unwilling to hold large positions overnight. The real estate and financial sectors remain the primary tells for the market, but also look for small cap out performance if a bullish trend emerges.